With the economy facing soaring crude oil prices for the past year, consumers and drivers have seen a major impact on their savings. It could seem as though the good old times are over. Gasoline at $4 a gallon is not something we can ignore, and if we take into account that Americans consume nearly 40% of the world's gasoline, you can see where the problems begin. So the surge in oil prices came with an imminent effect on consumers, who had to cut back on their spending.
But since we are already in this unpleasant situation, Kiplinger offers some solutions to help investors fight against high oil prices. Kiplinger underlines in this article that one smart move would be to minimize the cost of driving by making some good energy-related investments.
Gerry Jordan, manager of Jordan Opportunity, recommends investors invest in oil companies such as Schlumberger Ltd. (NYSE: SLB) and Weatherford International (NYSE: WFT), citing strong international business. In addition, Jordan believes that higher crude prices will increase drilling demand. On the other hand, Jordan also loves power companies like Calpine Corp. (NYSE: CPN) and Reliant Energy Inc. (NYSE: RRI) as he anticipates huge power outages across the globe during this year.
With the soaring oil prices, oil bulls have been benefiting from nice gains lately but there are some pessimistic signs that this may be about to change. The Fed's comments related to inflation stirred some worries among investors that interest rates could be lifted soon. A boost in interest rates will immediately lead to a stronger dollar, and could (and should) result in a sell off in crude.
Talking about this circumstance, SmartMoney is thinking about the best way to protect ourselves against losing money. As a first step, SmartMoney suggests that we reduce commoditiesand increase our allocation in stocks. To back up this idea, the article cites Simeon Hyman, equity strategist of the portfolio advisory group at Lehman Brothers' private investment management unit, who said the company is currently lighter on commodities and "fully invested" in stocks.
David Reilly, director of portfolio strategies at Rydex Investments, is taking into account the possibility of investing in Japan, which "is the most oil-dependent of all major economies. Reilly cites companies such as Toyota Motor (NYSE: TM) and Canon (NYSE: CAJ) which could benefit from investors' attention due to declines in crude oil prices.
An article in today's Wall Street Journal [subscription required], entitled "Ruling allows workers to sue on 401(k) losses," examines a unanimous ruling by the U.S. Supreme Court, upholding the right of workers to sue over losses in their 401(k) retirement-savings accounts in some circumstances.
With the stock market showing a lot of volatility and many retirement accounts in the red, employees mind find some solace in this recent ruling. The Journal quoted Gregory Ash, a pension attorney as saying, "Employers -- or whoever they appoint in their stead -- have an established obligation to run retirement plans as `prudent experts' on behalf of participants. Failure to do so can invite litigation."
Employers were charged with accusations that employees were offered subpar investment options and were charged prohibitive fees to make changes.
Before employees get too excited, the same article cites a minority opinion that may provide the ballast for employers to defend themselves against such claims.
Regardless, retirement advocates and investors should be pleased.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
Experienced fishermen know that sometimes the fishing is good -- and sometimes, it ain't.
Bloomberg reports on Mark Fishman, a famed bond trader previously with SAC Capital. His main fund, Sailfish Capital Partners LLC, has lost about half its assets since July because of soured investments and clients pulling money, according to two investors, cited in the article.
Fishman, 47, Sailfish's investment chief, left SAC in March 2005. After losing more than 12% in August, clients pulled about $400 million from Fishman's Multi-Strat fund this month alone, cutting assets to $980 million. Bloomberg cites increased mortgage defaults and credit markets seizing up as two reasons hampering performance at Sailfish.
I wrote recently about former Fed Chairman, Alan Greenspan, joining up with a leading hedge fund. Maybe Alan's looking to catch a few bond-trading fish to join him.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
I read a quote in an article recently which stated, "What Wall Street is about is smart guys thinking about ways to make money from dumb ones." That quote is attributed to one John E. Fitzgibbon, the publisher of an online newsletter, in an article from Eric Dash via The New York Times. While Mr. Fitzgibbon's remark might validate special investing skill on the part of some smart and timely investors, I take exception to the notion that all those investors who lost money in the markets over the past year are the dumb ones.
The question now is, where is the smart money headed?
You currently don't have to ask too many Americans about economic conditions in order to get the impression that at least here at home a majority of people sense that economic upheaval is quite underway. The word recession is becoming a bit too commonplace for my taste and I have come across more than a couple references to "the coming pandemic." I myself wouldn't go so far as to predict widespread economic collapse, but I have called the current economic environment a "realignment" and I hold with that assessment.
In light of our volatile economic times I thought it might be a good thing to do a quick piece about risk assessment. I have suggested that now is the time to cut risk to the bone; I still hold to that. The theory is that the greater risk you take the more you should be rewarded for taking that risk. My position is that currently our high risk economic environment will not, except in a few scattered cases, provide adequate return for the risks involved. In my opinion the risk curve is temporarily broken and I suggest holding the bulk of your money away from high risk play.
E-Trade (NASDAQ: ETFC) put volume & volatility at Panic levels on sell-off. ETFC is recently down $3.28 to $10.60. SBSH said on 8/12 "Disclosure in 10-Q short on substance from our viewpoint. Mgmt provided minimal new information on the composition of its $28 billion mortgage portfolio." ETFC call option volume of 37,882 contracts compares to put volume of 87,399 contracts. ETFC September option implied volatility of 210 is above its 26-week average of 37 according to Track Data, suggesting large price fluctuations.
Countrywide Financial - (NYSE: CFC) put volume & volatility Spike; indicating Crisis. CFC, a home mortgage lender, is recently down $4.18 to $17.13. CFC announced "it has supplemented its funding liquidity position by drawing on an $11.5 billion credit facility." Moody's Investors Services downgraded CFC rating to Baa3. CFC call option volume of 204,765 contracts compares to put volume of 412,286 contracts. CFC September option implied volatility of 210 is above its 26-week average of 56 according to Track Data, indicating larger price fluctuations.
I encountered a fascinating article at Forbes.com. Writer Tara Weiss brings to light the fact that when accepting a new job, recruits should realize that they have a right and even a responsibility to take some initiative in negotiating their pay package. Think of it this way: After all the long hours of processing applications, reviewing resumes, and conducting interviews, if you are the individual who receives the offer for employment, that indicates you have a lot going for you. Don't be undersold. It's not an issue of pride. It's responsible economics plain and simple.
With the hope that you'll read Ms. Weiss's article, I'll take the proposition one step further. I submit to you that once you have become established in a job, don't let a job classification or title restrict you from asking for more. If you're not bound by the terms of a labor agreement through a union or other labor contract, then the sky's the limit, and I'm saying that you should go for it. Every employment situation offers opportunities for advancement and for income increase also. If you don't believe me, let me prove it to you.
The company I work for is historically tight-fisted when it comes to employee compensation. It's not that we don't generate enough profit to justify pay raises, but as a subsidiary of a larger entity that provides the lion's share of our workload, accounting is "manipulated" to push the profit up to the parent company. This is simple to prove when given the fact that, in a responsible business sense, any company that shows the minimal profit we do would be immediately shut down and those capital assets would be put to work elsewhere. This makes it tough for a guy like me to get ahead. I, however, applied a strategy that has performed for me all of my working years, and which is encompassed in the following ideal:
I don't work for my employer, I work for me. It's all about my own bottom line.
I like millionaires, I always have and I always will. A report by TNS research has revealed that American millionaire households have increased in number over the last four consecutive years to an astonishing 9.3 million, give or take a few. That's an awful lot of millionaires if you ask me. What does the climbing head count among the well-to-do mean to Joe Average? Well, if you can get beyond the jealousy and resentment long enough to see the forest through the trees, you'll find that it means a lot to us.
Millionaires tend to move a lot of money, which is the life blood of our economy. They buy large homes and furnish them with expensive decor. They own nice cars, often several, give them the best of care, and house them in well-lit, heated garages. Millionaires buy into businesses in pursuit of growing their fortunes. They invest in speculative business ventures and back inventors with good (and not so good) ideas. Millionaires hire people to assist in the routine and mundane tasks in life. Cleaning the pool, cutting the lawn and shopping for groceries are a few of the tasks that can be delegated by throwing a few dollars at them. Millionaires can throw those dollars around and they tend to do just that. "There's more where that came from," chuckle, chuckle, snort. Of course some of the wealthy tend to be very tight-fisted but they're generally easy to pick out. They live lonely lives in snobbish repose, worried that the world shall snatch an extra dollar from them.
If you want to find out where the millionaires are, this CNN Money report is a fine place to get started. It lists the top ten counties where millionaires reside. Note that it's a bit California-heavy. Some other states with counties that boast the highest number of millionaires across the country include Illinois, Arizona, Texas, New York and Florida. The list goes on and reveals the fact that more Americans have become dollar-savvy. But what does this mean, bottom line, for our country? In some ways it depends on your perspective. Some folks will tell you that it's an indication that the wealth gap has widened. I laugh at that assertion and claim instead that it means our horizons of opportunity have broadened. I also believe that it's a culmination effect of our maturing 1960's baby boom. There are an awful lot of people out there who have striven long and hard to prove that the American Dream has been more than an unsubstantiated stance on manifest destiny. Today's millionaires are the result of prolonged and intense focus on the principles of true success. This stuff doesn't just happen by itself.
So, please don't be tempted to give into feelings of unfairness. Don't waste your time wondering, "Why them and not me?" Some times it's a simple flip of the cards that determines the outcomes of success, but most often, it's the result of blood-and-guts determination. Let the climbing number of millionaires serve as inspiration to you. Realize that financial security is still well within your grasp. Then, learn their ways, associate with them when you can and truly believe that success knows no boundaries of background, gender, race or class. Roll up your sleeves, pull down your cap and get yourself to the business of leaving self pity for the next guy. You have no time to feel sorry for yourself when you're busy staking out your spot on next years millionaire list.
Oh, and about that money you spend on lottery tickets... a passbook account gives better returns by far.
The TradeKing blog posted a nice review by Dominic Basulto of the May 2007 cover story of Kiplinger's Personal Finance. that pointed out some old tried and true investment strategies that are still the best way to build financial wealth over time.
While these strategies are nothing new, they should be reaffirmed from time to time.
Kiplinger's suggests that you consider the following when looking to consistently build your investment value over time:
1.) Get involved in a sector which has been underperforming for a considerable period of time and is showing strong signs of picking up. Consider Warren Buffett's railroads play. Could he be on to something?
2.) Keep a look out for "breakout technologies". I suggest keeping a close watch on solar and artificial intelligence plays as well as RFID. Basulto suggests telecom and biotech.
3.) Higher risk generally provides higher returns. Do ya think? Play the volatility game. This requires nerves of steel and a lightening hand but if you're good, the returns can be immense. It's like betting on the horse that's straining at the gate and sweating before the run. Either that pony will run uncontested or it'll spin circles in the first length. Volatility plays best if you're a heavy duty behind the scenes researcher.
4.) Look for fundamentally strong companies which have floundered under poor management and then wait for a management change. I have watched several people successfully work this angle.
The Kiplinger article seeks to provide insight into the strategies for compounding your money over various time frames. The information provided is valuable and time tested but Kiplinger's makes clear that they suggest a longer time table shall provide you with greater investment security.
The Volatility Index for S&P 500 Options (VIX) is down 0.52 to 14.44.
Louisiana Pacific(NYSE: LPX) call volume Heavy, volatility Higher on renewed Chatter. LPX is recently up .28 to $20.77. LPX has been frequently mentioned as possibly returning cash to shareholders or as a candidate for private equity LBO bid. LPX had 2006 total revenue of $2.2 billion. LPX has a market cap of $2.1 billion with long term debt of $644 million. LPX call option volume of 6,927 contracts compares to put volume of 164 contracts. LPX April option implied volatility of 32 is above its 26-week average of 29 according to Track Data, suggesting larger price fluctuations.
Houston Wire & Cable(NASDAQ: HWCC) volatility Flat; call volume heavy on secondary offering. HWCC offers specialty wire & cable. HWCC is recently up .78 to $27.46. HWCC announced a secondary offering of 5.5 million shares to 6.5 million shares. The price of the offering was set at $25. HWCC has a market cap of $569 million with long term debt of $12 million. HWCC reported 2006 total revenue of $323 million. HWCC call option volume of 2,275 contracts compares to put volume of 23 contracts. HWCC May option implied volatility of 47 is near its 26-week average according to Track Data, suggesting non-directional price risks.
I may have mentioned previously that for some odd reason I often have the very daunting privilege of entertaining some deeply intriguing questions. The query put to me today was issued in form similar to this:
If I could virtually guarantee you that by following my instructions on when to buy and sell stocks you would reap a profit at least 70% of the time, would you listen to my instructions and follow them? The only catch is you have to be the first one to take action based on my advice.
This question was brought up in reference to Jim Cramer and the tone of the question was not nice. It was implied that something less than honorable might be taking place behind the scenes. I stand in Jim Cramer's defense (as if it's even required).
Although at times he annoys me with his on screen antics, I have never had cause to believe that Jim Cramer's prognostications encompassed anything less than good, solid business analysis, thorough historical trending and conservative (although sometimes very wrong) performance projections. I have never known Mr.Cramer to lie about anything and he backs up every claim he makes with experience and facts.
Craig McCaw, the founder of both McCaw Cellular and Nextel, is taking his new wireless baby, Clearwire Corp, public.
Clearwire is building its network based on Wimax technology, similar to Sprint-Nextel Corporation (NYSE: S). Two large shareholders of Clearwire are Intel Corporation (NASDAQ: INTC) and Motorola Inc (NYSE: MOT).
Clearwire is expected to start trading today and raise $500 million from the IPO. For those who have not heard the buzz, Clearwire is a super broadband wireless network that will seek to compete with wireline boardband providers. It will focus on last mile connectivity.
From this Fly's perspective, be careful about jumping into this one. Most McCaw ventures, although they prove to be successful, often take a while to get going and to reach cash flow breakeven.
Also, going from low-bandwidth voice functionality to high-bandwidth streaming data is a tough task. It will get there, but may take a while.
The deal is expected to be priced between $23 to $25. In volatile markets, you can often wait for a correction in these earlier stage companies and buy them for close to nothing.
Volatility Index S&P 500 Options-VIX up 1.19 to 11.16.
MicrosoftCorp's. (NASDAQ: MSFT) February option implied volatility collapsed to 19 after record Q2 revenue of $12.54 billion. Microsoft reported Q2 EPS of 26 cents versus consensus estimates of 23 cents. Q2 revenue rose 6%. Microsoft launches Vista, Office 2007 and exchange Server 2007 on 1/30. Goldman Sachs says "good second quarter and stronger growth ahead." Microsoft February option implied volatility of 17 is below its 26-week average of 22 according to Track Data, suggesting decreasing price risk.
General Motors' (NYSE: GM) implied volatility was low at 34 going into the financial delay on its restatement. General Motors will delay its Q4 and full year earnings report, which was expected to be released next week, to again restate financial results. Citigroup has a $24 price target on General Motors. General Motors' overall option implied volatility of 34 is below its 26-week average of 42, according to Track Data, suggesting decreasing price fluctuations.
Option volume leaders today were: Amgen (NASDAQ: AMGN), Apple Computer (NASDAQ: AAPL), Nokia (NYSE: NOK), Microsoft and eBay (NASDAQ: EBAY).
Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.
Reveo is a technology incubator which has proven that they are worth keeping an eye on. At least indirectly, Reveo competes with companies such as IBM (NYSE: IBM) and 3M (NYSE: MMM). To date Reveo holds over 300 patents in the fields of electrochemistry, optics, fuel cells, and advanced materials. This is the kind of company that invents and develops the technologies of which your future shall be built upon.
Reveo invites independent investment and has their portfolio available online. Their mission is to spin off companies based on technologies which Reveo has created and made viable. The growing list of Reveo subsidiaries includes cutting edge technology companies such as: VRex Inc., Chelix Technologies Corp., eVionyx Inc., Xellerion Inc., and PetaComm Inc. These are all companies which are busy punching wide openings into the future.
In addressing the need to provide a solid and focused business platform from which to accomplish their goals, Reveo created the Edison Technology Portfolio (ETP) Strategy. This strategy provides the frame work needed to launch Reveo's subsidiary companies with the ability to immediately exploit marketable technologies with a minimum of administrative tangle. In other words, Reveo spin off companies are able to hit the ground running.
If being up to date with leading edge technologies and the opportunities presented therein is of interest to you, then you owe it to yourself to check this company out. With a successful stable of spin off companies already in hand, it stands to reason that Reveo isn't going to disappear any time soon. I see a wealth of opportunities here... do you?
With the economy facing soaring crude oil prices for the past year, consumers and drivers have seen a major impact on their savings. It could seem as though the good old times are over. Gasoline at $4 a gallon is not something we can ignore, and if we take into account that Americans consume nearly 40% of the world's gasoline, you can see where the problems begin. So the surge in oil prices came with an imminent effect on consumers, who had to cut back on their spending.
With the soaring oil prices, 
An article in today's Wall Street Journal [subscription required], entitled "
I read a quote in an article recently which stated, "What Wall Street is about is smart guys thinking about ways to make money from dumb ones." That quote is attributed to one John E. Fitzgibbon, the publisher of an online newsletter, in an 
You currently don't have to ask too many Americans about economic conditions in order to get the impression that at least here at home a majority of people sense that 
Volatility Index S&P 500 Options
I like millionaires, I always have and I always will. A report by TNS research has revealed that American millionaire households have increased in number over the last four consecutive years to an astonishing 9.3 million, give or take a few. That's an awful lot of millionaires if you ask me. What does the climbing head count among the well-to-do mean to Joe Average? Well, if you can get beyond the jealousy and resentment long enough to see the forest through the trees, you'll find that it means a lot to us.
If you want to find out where the millionaires are, this 
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Reveo is a technology incubator which has proven that they are worth keeping an eye on. At least indirectly, Reveo competes with companies such as IBM (NYSE: IBM) and 3M (NYSE: MMM). To date Reveo holds over 300 patents in the fields of electrochemistry, optics, fuel cells, and advanced materials. This is the kind of company that invents and develops the technologies of which your future shall be built upon.
The week in preview: New quarter earnings kick-off
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
